Geographic Concentration and the Temporal Scope of Agglomeration Economics: An Index Decomposition
AbstractThe paper decomposes a geographical concentration index to examine the temporal scope of a spillover, which is the period of time over which one firm's activity directly affects the location of other firms' activities. Natural advantages are fixed over reasonably long time periods, but if spillovers have a limited temporal scope then this can be used to identify these agglomeration economies. To operationalize the index decomposition the paper proposes an empirical methodology that is based on frequency estimator approach, which is applied across time periods. The approach is tested by numerical simulation and by application to a dataset on the location of new economic activity across British regions in the form of investment by foreign-owned plants. Overall, the results support the approach and indicate that the temporal scope of a spillover is on average about five years.
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Bibliographic InfoPaper provided by Spatial Economics Research Centre, LSE in its series SERC Discussion Papers with number 0094.
Date of creation: Nov 2011
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Web page: http://www.spatialeconomics.ac.uk/SERC/publications/default.asp
Industrial location; agglomeration forces; geographic concentration index; spillovers; temporal scope;
Find related papers by JEL classification:
- R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
- R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General
- L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
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